Looking for a way to calculate VaR using the Delta-Normal method in Excel? Well, you have come to the right place. In this article, we will walk you through four easy steps to calculate VaR using the Delta-Normal method in Excel effectively and with appropriate illustrations.

## Introduction to VaR

**VaR** stands for **Value at Risk**.** VaR** is a statistic that is used to forecast the biggest losses over a certain period of time. The magnitude and chance of possible losses in portfolios can be calculated using **VaR**. **VaR** is a tool used by financial companies to estimate and manage the degree of exposure to risk.

## Calculate VaR Using Delta-Normal Method in Excel: 4 Easy Steps

In this article, we will demonstrate 4 easy steps to calculate** VaR** using the **Delta-Normal **method. We will use the following dataset for this purpose.

### Step 1: Create Dataset with Proper Parameters

In this step, we will create a dataset with the necessary parameters. You must have the values of these parameters to calculate **VaR** using the **Delta-Normal** method in Excel.

- First of all, we will insert the value of the Portfolio.
- Next, we need the value of the Average Return. We assumed the Average Return value of 201.
- Then we require Standard Deviation. Let us take the value for a Standard Deviation as 119.
- Finally, 99 is taken as the Confidence Level.

**Read More: ****How to Calculate Option Greek Delta in Excel**

### Step 2: Find Minimum Return

In this step, we will use **the NORM.INV function** to find the value of Minimum Return to calculate **VaR** using the Delta-Normal method. Letâ€™s follow the instructions below to learn!

- First, select cell
**C10**and write down the following formula.

`=NORM.INV(1-C8,C6,C7)`

- This formula returns the inverse of the normal distribution for the mean of
**0.****201**and a standard deviation of**0.119**. - After that, hit
**Enter**to get the value of the Minimum Return. The minimum value is**-0.07584**.

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**How to Calculate Delta Percentage in Excel****How to Calculate Delta E Color in Excel****How to Calculate Delta Delta CT in Excel**

### Step 3: Calculate Value of Portfolio

Now we need to calculate the value of the new Portfolio to determine **Delta-Normal VaR** in Excel.

- First of all, select cell
**C11**and type the following formula.

`=C5*(C10+1)`

- This formula will give the result of the Value of Portfolio as $462,082.30.

**Read More: ****How to Calculate Delta in Excel**

### Step 4: Determine Value at Risk

Finally, we can determine the **Value at Risk (VaR) **using the previous and new Portfolio values.

- First, select cell
**C12**and write down the following formula in the formula bar.

`=C5-C11`

- Then press the
**Enter**button to get your desired result.

__Notes:__- Donâ€™t forget to give proper cell references or you wonâ€™t get the desired result.

**Download Practice Workbook**

Download this practice workbook to exercise while you are reading this article.

## Conclusion

Thanks for making it this far. I hope you find this article useful. Now you know four easy steps to calculate VaR using the Delta-Normal method in Excel. Please let us know if you have any further queries, and feel free to give us any recommendations in the comment section below.